In reviewing Mr. Lowell's petition to consolidate the Fairbanks North
Star Borough and the City of Fairbanks, we have found a few things that we consider very
disturbing. We are bringing these issues up now because of the
potential problems if petition circulators gather signatures under false pretenses. Some
of them may affect the validity of the petition. Because allowing voters to sign without
being aware of the true ramifications of the petition would be to leave the petition
sponsor, and even the boundary commission open to potential lawsuits, we felt we should
bring them to your attention now.

When quoting, our emphasis will be added with boldface type.

INSUFFICIENT SIGNATURES BEING COLLECTED:

According to Process for Municipal Dissolution, Consolidation,
Merger, and Unification, prepared by the Local Boundary Commission Staff for the
Alaska Department of Community & Regional Affairs, April 27, 1998, a petition
initiated by voters requires the signature of the following:

for merger or consolidation of a city and a
borough: at least 25% of the number of votes cast in the city's last regular election and, separately, at least 25% of the number of votes cast in the last
regular election in the Borough outside the city in question

Mr. Lowell asserts in his summary that the petition
"requires signatures of at least 25% of 13,725 votes cast in the October 6, 1998
local general election." However, it appears that Mr. Lowell forgot to include city
voters separately, which equaled 5,236 voters, 25% of which would add 1,309 additional
signatures, if we understand the rules of the boundary commission correctly. Also, the
final count of borough voters was actually 14,075, which we compute to mean that the
petition requires 3,519 borough voters, plus 1,309 city voters separately, for a total of
4,828, rather than 3,432.

NO CONSULTATION WITH CITY ON TRANSITION PLAN:

19 AAC 10.900(b) requires that this transition plan be prepared in
consultation with the officials of each existing borough and city proposed for
consolidation. The petition gave the following summary of the manner in which this
requirement was satisfied:

Officials of the City of Fairbanks and the Fairbanks
North Star Borough were consulted during the development of this transition plan and the
petition. Meetings, requests for information, interviews and phone conversations were made with both Mayors, Council members, Presiding
Officer and Assembly persons, Clerks, Engineering, Fire, Police, Finance, Legal, Community
Research, Planning, Public Works, Assessing, Service Area staff, former elected officials
and others.

In checking with city officials, we have found that this is an
untrue statement-he did not consult with them. Mr. Lowell and Ms Helms went to the city
mayor's office to set up meetings before the petition was far enough advanced to consult
on, and was told to come back later. Neither ever did. The city mayor knows of no
"consulting" that was done with city department heads. The items mentioned as
coming from the City of Fairbanks (in Exhibit K concerning sources of information) were
all public records available to anyone and do not show any level of
"consultation."

ASSETS RESERVED IN TRUST FOR DISSOLVED ENTITY:

The third paragraph of Mr. Lowell's transition plan correctly
states in part:

In accordance with AS 29.06.150 the proposed
municipality will succeed to all powers, duties, rights, assets and liabilities of the
municipalities to be dissolved by consolidation.

Yet five pages later, the following passage occurs:

Existing Assets, Obligations and Contracts

.. . The assets of the city, except the permanent
fund, shall transfer to the consolidated municipality. The assets of the permanent
fund shall transfer to a trust for the benefit of and use by the Urban Service Area. The trust shall be established by the assembly in a manner consistent with
current provisions governing the state permanent fund.

We believe this to be a direct violation of AS 29.06.150, which
controls and supersedes petition language to the contrary. Nowhere in state statute can we
find any language that guarantees any asset may remain with a
dissolved entity-in fact, state law does not allow it. If there is
any doubt at all, it certainly should not be stated as fact for the consideration of
voters making the choice of supporting or not supporting such a petition. The petition
language presents it as an absolute fact, and deceives voters into believing that the
borough will be allowed to ignore state law. With over $80 million at stake, this is too
important an item to leave to guesswork.

TURNING A HOME RULE CITY INTO A SERVICE AREA OF A SECOND CLASS BOROUGH:

Perhaps the most glaring deficiency in this petition is not even mentioned
in its proposal statement. Rather than "consolidation" that state statute speaks
of, where cities and municipalities dissolve and become a new municipality, this petition
seeks to turn a home rule city into a service area of a second class borough, with powers
that the borough cannot even exercise. The consolidation proposal purports to follow the
Alaska State Constitution and state law:

The petitioners hereby request that the Local Boundary
Commission grant this petition for consolidation resulting in the dissolution of the home
rule city and second class borough described herein and their incorporation as a second
class borough under the provisions of Article X, Sections 1, 3 and 5 of Alaska's
constitution; AS 29.06.090 - AS 29.06.170; 19 AAC 10.240 - 19 AAC 10.250; 19 AAC 10.400-
I9AAC 10.660; and I9AAC 10.900- I9AAC 10.990.

CONSOLIDATION PROPOSAL: The petitioners hereby petition to
dissolve the municipalities named below and to incorporate, through consolidation, the
second class borough retaining the name Fairbanks North Star Borough. The
new municipality may use the name Municipality of Fairbanks hereinafter called
Municipality and described in this petition:

Municipalities to be Dissolved by Consolidation:

The City of Fairbanks
The Fairbanks North Star Borough

Second Class Borough to be Incorporated by
Consolidation:

The Municipality of Fairbanks

There is no mention of turning Fairbanks into a service area, although
there is a hint given under "Areawide and Non-areawide powers and services",
with the heading given "Proposed Urban Service Area:" Later, under Exhibit I,
Transition Plan, Areawide Powers, the following statement is made:

No existing borough areawide powers will be eliminated
by the consolidation and no new powers or services will be added with
the exception that solid waste collection will become an areawide power instead of
non-areawide and City of North Pole.

On the following page of the Transition Plan, the petition sponsor
states that "The Municipality will establish a new Urban Service Area to provide
existing services on a service area and non-areawide basis as follows:" and proceeds
to list law enforcement, among other services. We believe this would be in violation of
state statute AS 29.35.450(b):

(b) A new service area may not be established if,
consistent with the purposes of Alaska Constitution, art. X, the new service can be
provided by an existing service area, by annexation to a city, or by
incorporation as a city.

In essence, petitioners propose to provide services in the mode of a
new service area-services that not only can be provided by incorporating a city, but are
in fact already being provided by the incorporated City of Fairbanks.

In Keane v Local Boundary Commission, 893 P.2d 1239 (Alaska 1995) the
following interpretation of the law was issued:

We conclude that AS 29.05.021(b) is not in conflict with
either AS 29.35.450(b) or article X, section 5 of the Alaska Constitution. Alaska Statute
AS 29.35.450(b), which follows the language of article X, section 5, is a limitation on
the creation of new service areas. It provides that a new service area may not be
established if the new service can be provided by another means such as incorporation of a
city. In contrast, AS 29.05.021(b) is a limitation on the incorporation of
cities. It disallows incorporation when the desired services can be provided by a
borough on an areawide or nonareawide basis. A home rule borough can
provide services on an areawide or nonareawide basis without resort to a service area.

It is reasonable to interpret AS 29.35.450(b) and article X,
section 5 as preferring incorporation of a city over the creation of new service areas. This interpretation is supported by legislative history and is not inconsistent
with article X, section 1 of the Alaska Constitution. Constructing a barrier to approving
an excessive number of government units does not prohibit the creation of them when they
are necessary. Whether a service area or a city is established, another government unit is
created. If numerous service areas are set up supplying only one or two services each,
there is the potential for an inefficient proliferation of service areas. In contrast,
once a city is established, it can provide many services, and other communities can annex
to the city in the future. Although the framers entertained the idea of unified
local governments, they realized that the need for cities still existed.

In summary, we hope that you will consider the issues we have
raised and take the appropriate action. We were concerned to find that our group was not
included on the list of "Parties that may have a particular interest in this
consolidation proposal" and request that you add the Interior Taxpayers' Association
so that we might receive notice of proceedings relating to the petition. We also found it
odd that organizations such as the Fairbanks Chamber of Commerce, the Downtown Association
of Fairbanks/Main Street, and the Fairbanks Convention and Visitors Bureau were not
included, to name just a few.

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